Networks
Former franchise operators claim telco unfairly cut commission and other payments
Vodafone has not listed a potential liability in its 2026 financial results stemming from a legal claim by franchise operators who allege they were harmed by company-imposed business decisions.
The Fairer Franchise campaign group represents 62 current and former Vodafone franchisees, who are bringing an £85 million
($115 million) High Court claim, alleging the telco unilaterally cut commissions and overhauled the way it compensated them for operating Vodafone-branded
stores, often without consultation.
The claimants, some of whom are former employees of Vodafone,
say they were encouraged to invest heavily in Vodafone stores after the firm established
a franchise program in mid-2017. This expanded
to around 400 branches, 183 of which were operated by the claimants in the
case.
Vodafone is alleged to have repeatedly and unilaterally cut
the commissions paid to franchisees for sales of its products and services, particularly
from July 2020 onward. The group also claims Vodafone changed remuneration models
without consultation or proper consideration of the impact this would
have on the franchised businesses.
In particular, the claimants allege Vodafone unlawfully clipped remuneration from August 1, 2020, by reducing the commission
rates on customer and home broadband upgrade transactions, and that it restructured
the calculation of commission to franchisees in a manner beneficial to itself, as part of the rollout of a scheme called “EVO” in June
2021.
At the heart of the case is the group’s claim that the franchisees were effectively “commercial agents” of Vodafone – within the
meaning of the Commercial Agents Regulations – because they sold products and
contracts on Vodafone’s behalf. Vodafone denies this and says the regulations do not apply.
If the High Court rules that they are applicable, the franchise
operators may be entitled to termination indemnities that the claimants estimate could be worth up to £52 million ($70 million) alone.
The group says Vodafone has already conceded aspects
of the claim in court, including admitting breach of contract in relation to
rent-free periods for some stores that were not passed on to the franchisees.
A spokesperson for the Fairer Franchise group told The Register: “Vodafone has again failed to disclose our £85 million High
Court claim as a contingent liability in today’s results, while quietly paying
more than £20 million to other franchisees with no explanation, and after
admitting it breached our contracts over rent-free periods never passed on to
us.”
“We are 62 people who lost our businesses, our
savings, and in many cases our health. As VodafoneThree
prepares to reshape two retail estates, the question for investors and analysts
is whether this management team should press ahead while serious allegations
about its treatment of franchisees remain unresolved.”
The next hearing is scheduled for July 9. The Register asked Vodafone for a statement regarding the group’s claims and why it did not mention the case as a potential liability in its financial results.
In its results report published Tuesday, Vodafone says: “Legal
proceedings where the Group considers that the likelihood of material future
outflows of cash or other resources is more than remote are disclosed below.
Where the Group assesses that it is probable that the outcome of legal
proceedings will result in a financial outflow, and a reliable estimate can be
made of the amount of that obligation, a provision is recognized for these amounts.”
For the UK, Vodafone lists two lawsuits. One involves
alleged overcharging
of customers who signed contracts that included both a handset and airtime. The other covers alleged collusion between the major UK mobile networks
to withdraw
their business from Phones 4U, causing its collapse. There is no mention of the Fairer Franchise case.
Vodafone Group’s fiscal 2026 results showed an 8 percent year-on-year increase in revenue to €40.5 billion ($47.6 billion), attributed to strong services growth and the consolidation
of Three UK. Service revenue grew 8.8 percent to €33.5 billion ($39.3 billion), although for
the UK the rise was just 0.3 percent. ®
